Adjusting Health Expenditures for Inflation: A Review of Measures for Health Services Research in the United States

ObjectiveTo provide guidance on selecting the most appropriate price index for adjusting health expenditures or costs for inflation. Data SourcesMajor price index series produced by federal statistical agencies. Study DesignWe compare the key characteristics of each index and develop suggestions on specific indexes to use in many common situations and general guidance in others. Data Collection/Extraction MethodsPrice series and methodological documentation were downloaded from federal websites and supplemented with literature scans. Principal FindingsThe gross domestic product implicit price deflator or the overall Personal Consumption Expenditures (PCE) index is preferable to the Consumer Price Index (CPI-U) to adjust for general inflation, in most cases. The Personal Health Care (PHC) index or the PCE health-by-function index is generally preferred to adjust total medical expenditures for inflation. The CPI medical care index is preferred for the adjustment of consumer out-of-pocket expenditures for inflation. A new, experimental disease-specific Medical Care Expenditure Index is now available to adjust payments for disease treatment episodes. ConclusionsThere is no single gold standard for adjusting health expenditures for inflation. Our discussion of best practices can help researchers select the index best suited to their study.